Monday, July 10, 2017

Markets fluctuate ahead of earnings season

Dow lost 1, decliners over advancers about 5-4 & NAZ was up 3.  The MLP index slid back a fraction to the 297s & the REIT index was off fractionally to the 344s.  Junk bond funds did little & Treasuries crawled.higher.  Oil recovered & is now up pennies (more below) & gold was flattish.

AMJ (Alerian MLP Index tracking fund)

CL=FCrude Oil  43.95

GC=FGold     1,209.30

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Saudi Aramco, which plans what could be the world's biggest IPO, will invest more than $300B over the next decade to maintain its spare oil-production capacity & explore for more natural gas, CEO Amin Nasser said.  The outlook for oil supplies is “increasingly worrying,” with about $1T  in investments lost during the current industry downturn & fewer new deposits being discovered, Nasser said.  Some estimates suggest that at least 20M barrels a day of new output is needed over the next 5 years to offset rising oil demand & the natural decline of developed fields, he said.  “There seems to be a growing belief that the world can prematurely disengage from proven and reliable energy sources like oil and gas, on the mistaken assumption that alternatives will be rapidly deployed,” Nasser added.  The petroleum industry will be at the heart of global energy for years, & the transition to use of alternatives will be “long and complex,’ he said.  The state-run company, the world's biggest oil exporter, boosted production to an annual record last year before the kingdom led OPEC & other producers to curb output to stem a global glut.  Aramco is also at the heart of the nation's long-term strategy to wean its economy off oil.  The gov plans to sell about 5% of the company in 2018 in what could be a record IPO.  Current oil prices won't affect the company's decision for a planned share sale.  “Financial investors are shying away from making much needed large investments in oil exploration, long-term development, and the related infrastructure,” Nasser added, putting part of the blame on what he said were “misleading arguments about peak oil demand and stranded resources.”  The volume of conventional oil discovered around the world over the past 4 years, for example, is down more than 50%  from the previous 4 years, he said.  “Investments in smaller increments such as shale oil will just not cut it. Yet without those higher investment levels, the energy transition -- and therefore energy security -- may be fatally compromised.”  Aramco plans to spend $300B on projects over the next 10 years to maintain its spare oil production capacity, the biggest by far in OPEC, & boost exploration & output of conventional & unconventional gas, Nasser said.

Aramco to Spend $300 Billion; CEO Says Outlook for Oil Supplies Is ‘Worrying’

Oil fell, adding to heavy losses at the end of last week due to rising drilling activity in the US & no let-up in supply growth from both OPEC & non-OPEC exporters.  Prices dropped even as OPEC signaled it may widen its production caps to include Nigeria & Libya, whose output has recovered in recent months after being curtailed by years of unrest.  US crude futures were last 49¢ lower at $43.74 a barrel.  Several key OPEC ministers will meet non-OPEC Russia on Jul 24  to discuss the situation in oil markets.  Kuwait said on that Nigeria & Libya had been invited to the meeting & their production could be capped earlier than Nov, when OPEC is scheduled to hold formal talks.  Libya said it was ready for dialog but added that its political, economic & humanitarian situation should be taken into account in talks on caps.  US energy firms added 7 oil drilling rigs last week, marking a 24th week of increases out of the last 25 & bringing the count to 763, the most since Apr 2015.  US oil production has risen more than 10% since mid-2016.

Oil falls as evidence points to rising global supply

German exports were up 1.4% in May compared with the previous month, outpacing import growth & pushing the country's trade surplus higher.  The Federal Statistical Office said that imports to Europe's biggest economy were up 1.2%.  The seasonally adjusted trade surplus was up to €20.3B ($23.1B), from 19.8B in Apr.  The figures follow data last week showing that factory orders & industrial production both increased in May. 

German exports higher in May, trade surplus widens

Stocks are back to marking time while waiting for earnings season to begin.  Trump is back from his trip to Europe & attention, side from earnings, will be on getting healthcare & tax legislation passed.  That looks to be very tough.

Dow Jones Industrials

stock chart


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